July 23, 2015

How Albuquerque Journal phased out its news racks

Newspaper shares lessons learned from its test and process

By Catherine Payne, NAA content producer

Thinking outside the box, one newspaper in New Mexico eliminated its coin-operated newspaper racks after an eye-opening test.

The Albuquerque Journal recently made the move amid declining rack sales. The newspaper is focusing on digital subscriptions, home delivery and sales at retail locations.

“To buy a single newspaper with quarters — people just aren’t doing it anymore,” Joe Leong, vice president of circulation at the Journal, said last week. “It was a very small percentage of sales, but it was a big expense. Also, racks are so old and beat up. It’s not a great projection of your image, and it’s not cost-effective to replace them.”

The Journal’s decision took into account how the newspaper reaches readers on its different platforms. More than 501,000 people in New Mexico read the Journal‘s digital and print products, including its $1 daily paper and $2 Sunday paper, in a typical week.

Three years ago, the newspaper had more than 1,000 racks. Chipping away at its least profitable racks, it had 500 left by the start of this year. After further assessment, it decided to wrap up the rack service.

The company launched an 8-week test in a district. The test got rid of racks to gauge the effect on sales at existing retail locations, such as diners, as well as the response from consumers and vendors. Results showed a 10-15 percent lift in retail sales.

“It gave us a lot of confidence moving into the full-blown plan as well as some numbers to base projections on,” Leong said.

The Journal made the final push starting June 1. It phased out 125 racks a week for four weeks. It has a handful of racks left on a military base and some in rural areas.

Leong

The newspaper opened over-the-counter sales at 50 retail locations and plans to add another 50. It started selling single copies in a non-traditional way at retail locations. It sells a bulk amount at a reduced rate but does not pick up return copies. Doing so reduces overhead costs in terms of picking up return copies, among other things.

To give an example of how things have worked out, Leong pointed to the nine IHOP locations in the metro area. They went from selling an average of 146 single copies in racks to 750 single copies over the counter on a Sunday, he said. Citing convenience as a factor, he said customers grab newspapers and pay for them at the end of meals.

In addition to adding retail locations, the newspaper ramped up other efforts. It offered discounted Sunday-only subscriptions and changed delivery from Friday and Sunday to Friday, Saturday and Sunday.

While the newspaper company has not heard from advertisers about the decision, it has received calls from readers and vendors near where racks were located, Leong said. It offered a special deal to the few readers who called and converted 90 percent of those vendors who complained into dealers, he added.

Industry trend

The Journal‘s move comes at a time when the newspaper industry is seeing a shift in single-copy sales. The number of news rack locations has dropped almost in half in the past six years, according to the latest NAA data. Meanwhile, newspapers have added retail locations, such as convenience stores, drugstores, fast-food restaurants and supermarkets.

Albuquerque Journal

Eighty percent of weekday single copies are sold over the counter at retail locations and 20 percent are sold at coin-operated news racks, according to NAA’s upcoming 2015 Circulation Facts, Figures & Logic report. Less than 15 percent of Sunday single copies are sold through racks, said the report, which will be released soon.

Consumer payment preferences contribute to this shift from rack to retail sales. Many younger adults are comfortable using credit and debit cards for small purchases.

Among those age 49 and younger, just 52 percent prefer cash while 46 percent prefer a credit or debit card for a $5 purchase, according to a 2014 survey by CreditCards.com.

Another factor is the shift in news consumption habits. Mobile-only readers of newspaper digital content increased 53 percent from March 2014 to March 2015, NAA reported.

As newspapers reduce or eliminate their racks on the streets, they sell them to other newspapers, which is not easy to do, sell them as scrap metal, or donate them. Last summer, NAA wrote about The Washington Times donating its extra racks to the nonprofit Little Free Library. The racks were transformed into structures for exchanging books.

The Journal sold some racks to a company in Mexico, and it donated several to an education foundation for library use.

Key takeaways

Leong shared advice for other newspapers that are considering eliminating their racks. Spend a lot of time on analytics and conduct a test, he said.

Do an honest assessment of income versus revenue, looking at return copies as well as employee, maintenance and other expenses, Leong said. Drill down to segments of single-copy sales, he added. “When we looked at single copy as a whole, it was profitable. When you drill down, you see that the rack segment is dragging it down.”

Leong said those newspapers interested in learning more can contact him at [email protected].

September 15, 2015

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